The Argument For Lean Modeling

If you’re involved in a startup – or plan to be – then you’ll want to check out J.J. Colao’s latest column at Forbes.com.

Colao invites Konrad Waliszewski, vice president of business development and finance at Speek, to contribute a guest post offering advice to entrepreneurs preparing to launch companies.

From Waliszewski:

Let’s face it. Traditional corporate finance just isn’t equipped to handle a fast-paced, interconnected world. From startups to Fortune 500 companies, from Silicon Valley to Wall Street, I have rarely worked with a company that’s gotten its financial modeling completely aligned with the reality of its business. Large corporations have excuses: shareholder scrutiny, stodgy bureaucracies and years of habit. But startups have no excuse.

If you’re part of a young company, you might be familiar with Lean Startup methodology, which advocates a “build, measure, learn” approach that encourages entrepreneurs to continuously test their assumptions with market data. You should be doing the same exact thing with your financial forecasts.